Copper prices are on the rise again, extending from recent record highs, primarily due to persistently tight supplies and strong demand. ING analysts Warren Patterson and Ewa Manthey highlighted that tight London Metal Exchange (LME) inventories and robust US-bound copper flows are the main drivers. This tightness is evidenced by a significant 51.4 kiloton increase in cancelled LME warrants and renewed withdrawals from warehouses, suggesting that any recent inventory recovery may be temporary. Elevated US premiums further underscore the strong demand in that region, despite concerns about record-high prices starting to impact demand in China.
The global copper market is experiencing a dynamic interplay of supply and demand factors. While recent deliveries into LME warehouses, including a substantial contribution from Trafigura Group, did temporarily ease a historic squeeze, overall inventories remain low. LME inventories on warrant increased by over 35,000 tons in one day, and another 20,000 tons the previous session, after having shrunk by about 75% from mid-April highs. Despite these temporary inflows, the underlying physical tightness persists, fueled by production issues in Chile and the Democratic Republic of Congo, and weak mine output outside China.
The threat of US import tariffs is significantly altering global copper flows, potentially pushing prices to new record highs. Higher US prices have incentivized traders to ship metal into COMEX warehouses, leading to a record 675,185 metric tons in COMEX inventories, up for 46 consecutive days. This arbitrage trade is depleting inventories elsewhere and transforming what was projected to be a global surplus of 639,000 tons in 2026 into a balanced or even deficit market, according to CRU's Robert Edwards. The US imported almost 885,000 tons of refined copper in the first half of 2026, a 3% increase from the previous year, and more than double the imports in the first six months of 2024.
The prospect of a 15% tariff from January 1, 2027, potentially rising to 30% from 2028, is a key factor. While refined copper was exempted from tariffs last year, the US Commerce Department was due to report to the White House by June 30, 2026, on the market. Macquarie strategist Alice Fox suggests that while COMEX copper stocks are high, prices would "massively spike" if tariffs proceed. Conversely, Glencore CEO Gary Nagle believes that any tariff announcement would provide market clarity and could lead to a price fall. If these high stockpiles remain in the US and are not re-exported, other regions, including China, will continue to face tighter supplies, potentially driving copper prices to new record highs in the coming weeks or months.
